Chapter 12 Production and Growth

ECONOMIC GROWTH AROUND THE WORLD

30. Last year real GDP per person in the imaginary nation of Olympus was 4,500. The year
before it was 4,250. By about what percentage did Olympian real GDP per person grow
during the period?
a. 4.6 percent
b. 5.2 percent
c. 5.9 percent
d. 6.5 percent

33. Last year the imaginary nation of Freedonia had a population of 2,700 and real GDP of
16,200,000. This year it had a population of 2,500 and real GDP of 14,640,000. What
was the growth rate of real GDP per person between last year and this year?
a. -2.4 percent
b. -0.7 percent
c. 4.4 percent
d. 5.2 percent

35. In 2009, the imaginary nation of Florastan had a population of 8,300 and real GDP of
190,900. Florastan had 5% growth in real GDP per person. In 2010 it had a population
of 8,400. What was real GDP in Florastan in 2010?
a. 200,445
b. 202,860
c. 198,059
d. None of the above is correct.

37. Last year Panglossia had real GDP of 27.0 billion. This year it had real GDP of 31.5
billion. Which of the following changes in population is consistent with a 5 percent
growth rate of real GDP per person over the last year?
a. The population decreased from 88 million to 84 million.
b. The population decreased from 75 million to 73 million.
c. The population increased from 45 million to 50 million.
d. The population increased from 60 million to 62 million.

38. In 2009, the imaginary nation of Mainland had a population of 6,000 and real GDP of
120,000. In 2010 the population was 6,200 and real GDP of 128,960. Over the year in
question, real GDP per person in Mainland grew by
a. 2 percent, which is high compared to average U.S. growth over the last one-hundred
years.
b. 2 percent, which is about the same as average U.S. growth over the last one-hundred
years.
c. 4 percent, which is high compared to average U.S. growth over the last one-hundred
years.
d. 4 percent, which is about the same as average U.S. growth over the last one-hundred
years.

average U.S. growth over the last one-hundred years = 2%

PRODUCTIVITY: ITS ROLE AND DETERMINANTS

42. Country A has a population of 1,000, of whom 800 work 8 hours a day to make 128,000
final goods. Country B has a population of 2,000, of whom 1,800 work 6 hours a day to
make 270,000 final goods.
a. Country A has higher productivity and higher real GDP per person than country B.
b. Country A has lower productivity and lower real GDP per person than country B.
c. Country A has higher productivity, but lower real GDP per person than country B.
d. Country B has lower productivity, but higher real GDP per person than
country B.
Productivity of country A = 20 goods per hour

Productivity of country B = 25 goods per hour

Real GDP per person for country A = 128 goods per person

Real GDP per person for country B = 135 goods per person

Real GDP per person = [ Final goods ] ÷ [ Population ]

The Productivity = [ Total Output ÷ Total Productive Hours ]

Table 12-1.
Athens and Troy both produce only ribs and baked potatoes.
Athens Troy
Quantities
Ribs 300,000 200,000 46.
Baked Potatoes 400,000 250,000
Base year prices
Ribs $10 $10
Baked Potatoes $4 $4
Population and
Employment
Population 12,000 8,000
Total hours of employment 80,000 48,000
Real GDP 4,600,000 3,000,000
Real GDP per person 383 375
Productivity 57,5 62,5

Refer to Table 12-1. Which of the following is correct?

a. Both real GDP and real GDP per person are higher in Athens than Troy.
b. Real GDP is higher in Athens while real GDP per person is higher in Troy
c. Real GDP is higher in Troy while real GDP per person is higher in Athens.
d. Both real GDP and real GDP per person are higher in Troy than Athens.

47. Refer to Table 12-1. Which of the following is correct?

a. Both productivity and the standard of living are higher in Athens than Troy.
b. Productivity is higher in Athens while the standard of living is higher in Troy
c. Productivity is higher in Troy while the standard of living is higher in Athens.
d. Both productivity and the standard of living are higher in Troy than Athens.